Alternative payment methods generally refer to payment methods other than credit card or bank card payments. On top of net banking, FPS, and OTC payments, digital wallets are a popular alternative in Asia, and they have the potential to become a leading payment method in the domestic and possibly cross-border business/ecommerce world. Examples include Alipay, WeChat Pay, LINE Pay, ShopeePay, GrabPay, and others, on top of domestic ones like GCash, TrueMoney, and Boost, among others.
By 2025, Asia is forecasted to have 72% of online payments made by e-wallets, according to Tech Wire Asia – and digital wallet users find them safer and more secure due to the authentication process and the spending limit. Additionally, digital wallets can support a diversity of cross-border businesses, as buyers can easily access them and pay with a single tap anywhere, on a smartphone or wearable devices.
Digital wallet users enjoy the convenience of loading up their concert tickets, travel passes, loyalty cards, or anything that can be placed in a wallet, and they are more appealing to digital spenders for cross-border B2C and C2C transfer use – especially for those customers who do not have access to credit cards, specifically in markets like the Philippines and Indonesia. To ensure they fulfil the payment needs of global buyers and to avoid checkout abandonment, merchants prepare to accept more digital wallets in different countries, and more payment gateways support regional digital wallets that allow local currency settlement.
APAC is diverse and heavily populated, and it has a tradition-focused collectivist culture. Being highly group-oriented, buyers in the region tend to follow and choose popular payment options to keep a strong connection with society.
In Asia, digitalisation together with the use of smartphones and contactless payment products are propelling the digital payment market forward, and governments are taking a more active role in leading and driving digital payment adoption to bring the countries, economies, and digital growth to the next level. The APAC payment market is expected to grow, while the payment trend is moving from cash-heavy to contactless and digital payments.
Consumer payment behaviours are very fragmented across Asia. While consumers in Hong Kong and Singapore tend to be more receptive towards the use of cards and mobile wallets (e.g., Apple Pay, Google Pay, Samsung Pay) to pay digitally, in some Asian markets like China, Philippines, and Vietnam, consumers tend to prefer to pay with local and regional wallets, as some find it safer and more convenient.
The smartphone payment landscape has grown, becoming more functional in enabling ecommerce and m-commerce payments but also fund transfers. In addition, particularly in China, fast, easy, and flexible QR codes or link payments are being commonly used, and the QR code-based order and pay system is a leading form of payment in the retail environment both in China and India – where the cost of setting up and managing this option is low, compared to other payment options.
Another payment method that merchants need to consider when penetrating APAC is Buy Now, Pay Later (BPNL), which is becoming a prevalent option in the region as it appeals to Gen Z customers who enjoy the benefits of deferred payments.
In terms of specific markets to watch, while some people are cautious about the economic outlook of Asia after COVID-19, we are confident and positive on the growth of digital payment adoption and spending especially in Indonesia, Vietnam, and India. As tourism rebounds in Asia, we also envision the rebound of the travel-related payment volume in markets like Thailand, the Philippines, Japan, and others.
As payment services get more diversified and fragmented, continual innovation in the payment technology and integration services space would be the key to navigating times of uncertainty and economic flux and opportunities.
With digitalisation and technological innovations playing a significant role in the economic sector of the world, AsiaPay will continually bring advanced, secured, integrated, and cost-effective digital payment processing solutions and comprehensive services to banks and e-businesses globally. We will continue to expand the omnichannel payment platform and technology geographically, payment-wise, feature-wise, and application-wise, to allow our valued bank and merchant clients to keep up with the trends and enjoy all these values and advantages.
In terms of forecasts:
After the pandemic, it is predicted that the recovering travel, retail, and hospitality businesses will welcome a year of sales boost in 2023. Contactless and digital payments will continue to reshape the market share, and digital wallets are likely to become an even more popular digital payment method used in these industries.
Social and live commerce will be a new selling channel in the ecommerce world. With the special features and interactions of social media, buyers are engaging and buying directly from the social platform – and there are over 50% of brands planning to sell via social networks on TikTokShop, Facebook, Instagram, and Pinterest Shop in 2023.
Web 3.0 in payment technology and CBDCs will continue its development and slowly widespread in the society.
Payment optimisation and integration will be key focus areas to achieve success and build an ecosystem with banks, fintechs, and back-office system providers.
The evolution of APIs will allow for more flexible payment choices, management, and value-added functionalities.
Variable recurring payments (VRPs) allow businesses to make a more precise payment forecast from the current direct debit scheme.
The payment industry will keep exploring the power of AI and applying it to the financial services and digital banking sector to further accelerate the digital payments revolution.
This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
Joseph Chan founded the company in August 2000. He spearheaded the company and product development together with his management team to become one of the most successful digital payment services and technology companies in Asia. Through successive positions in banking and finance industries, Joseph has consolidated his expertise and experience in strategic planning, management and implementation of financial, electronic banking, Internet, and mobile product services and systems in Asia.
Founded in 2000, AsiaPay, a premier digital payment solution and technology player in Asia, strives to bring advanced, secure, integrated, and cost-effective digital payment processing solutions and services to banks and e-businesses around the world. Its integrated omnichannel payment services cover credit and debit cards, bank account/net banking, digital wallets, over-the-counter, prepaid cards, and other digital means.
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